Ethereum went through numerous updates recently, and an exciting project is expected to be released around March 2024. Blast is a layer-2 blockchain solution that will be ready at the beginning of the year and will pave the way to more native staking within networks through ether staking. Although the general opinion from investors is pessimistic about the update, Blast already gathered $225 million in staked Ether in a few days on Lido. This popular liquid-stacking protocol pushed Blast to be one of the largest holders of staked Ether.
Since the Ethereum blockchain uses ETH, the platform is responsible for its operability and effect on the price of Ethereum, according to Binance, which is why it’s often packed with updates and improvements. Hence, the Blast layer-2 solution will lead to further improvements.
However, it’s surrounded by controversy.
What really is Blast L2?
The layer-2 protocol aims to improve Ether’s staking methods on-chain, helping ETH holders make better profits with more efficient techniques. In other words, Blast will automatically stake all cryptocurrencies in Lido and ensure the rewards will go to the investors. Blast will also aid investors interested in other stablecoins to receive additional yields from other on-chain protocols, such as T-bill.
Blast was also planning to enable withdrawals in February 2024 before its release to kick it off. However, some investors are so excited about the new layer that they pumped it with millions in so little time. Its daily growth makes Blast the fastest-growing layer two on Ethereum compared to Optimism or Abitrum.
Blast points were already distributed, with the launch and redemption to happen in the second quarter of 2024, but investors will be able to withdraw their tokens three months after the access campaign.
Why are some investors skeptical of Blast?
Although Blast seems like a great investment in the network, it comes with risks that make some users believe this is nothing more than a pyramid scheme. First, let’s discuss the disadvantages. Blast’s value is linked with Ether, whose volatility is considerable, especially for beginners. This means there’s no way to predict the token’s price on the unlocking day, so ETH can either boom or shrink.
At the same time, the interest in layer-2 dApps cannot be forecasted, so it’s a similar situation as in the case of Ether’s price. Hence, if no developers find Blast useful or efficient for their projects, the solution can become a big failure for Ethereum and even bring it down among the competition.
Regardless of the technical possibilities, users don’t see Blast with good eyes since it looks like a pyramid scheme to many. Early investors will gain more points to withdraw at the right moment, and they’ll be able to receive even more if they invite more users. For instance, if your invited friends bring more users within the system, you receive 16% more points and an additional 8% if the inviting cycle continues.
Does DeFi need more layer-2 networks?
DeFi ecosystems that primarily run on the Ethereum blockchain are some of the crypto sector’s most productive but challenging parts. That’s why layer-2 solutions have been created, to make the network fast and low-cost in order for developers and investors to keep their game on.
Ethereum already has many scalability solutions on layer 2 called rollups that process a considerable number of transactions per second. Most important rollups include the following:
- Optimistic rollups operate on trust automated principles, making them efficient and accurate in incentivizing ETH. However, they can slow down transaction finalities at times;
- ZK-rollups work on a cryptographic model and ensure enhanced security. Still, it’s resourcefully intensive due to the need for complex cryptographic operations;
Layer-2 main problems include congestion and centralization
Layer-2 solutions were specially provided on top of Layer-1 to solve some of its problems and ensure seamless transactions. However, there might be a limit on how many updates and solutions the first layer supports. In time, most transactions will move on to the second later, but they’ll settle on the first layer, which will ultimately lead to its constant congestion.
Moreover, the dangers of centralization are targeting most massive cryptocurrencies, not only Ethereum but Bitcoin too. As decentralized as they should’ve been, blockchains and crypto networks seem to be ruled by a few mining pools and groups of investors who have gathered their forces and assets, affecting fees.
When it comes to layer-2 options on Ethereum, operators are expected to handle data top Layer-1, which increases concerns about the security and reliability of the decentralized environment. There are few operators at the moment, and if some of them are offline, the downtime can affect rollups and, therefore, network scalability.
Staking options on Ethereum: which is best?
There are many types of staking on Ethereum that each fit different types of users. There is pooled staking, the method of combining stakes of more users to meet the 32ETH deposit. Liquid staking is a similar approach but with additional proof of ownership of your stakes.
But the native staking development on Ethereum that’s about to evolve with Blast is received with such excitement because this staking method is one of the best and least dangerous within the staking environment. Validators secure the network, validate blocks and maintain the consensus while earning great rewards that are not shared.
The Blast update might improve native staking and, therefore, increase the number of validators, helping the network work faster and more efficiently with less effort. Validators are also beneficial for blockchains since they ensure ledger immutability and prevent double spending with crypto.
Wrapping up
Another update of the Ethereum blockchain will be released in March 2024. The layer-2 solution called Blast aims to improve ETH staking through the Lido protocol and boost stablecoins to investors. However, many users fear this is only a pyramid scheme because its value reached significant prices in only a few days, and investors who bring more individuals within the network will be rewarded more than regular users. We’ll see how the solution will aid the platform and users in time.
